Can Tiago turn around Tata Motors’ under performance?

Tata Motors may be the parent company, but it can only hope to learn from their processes and not borrow the technologies. After taking over as design head two years back, Bose introduced two new steps in Tata Motors’ design. Clay modelling is one.Suman Layak | ET Bureau | Updated: July 17, 2016, 10:58 IST

At the Tata Motors design studio in Pune, a group of grown men play around with clay, making models of cars through the day. Some are miniatures but then others are life-size.

The clay is special; when heated to 65 degrees centigrade, it is soft and malleable. Cooled to room temperature, it becomes harder and lends itself to scraping and sculpting with knives.

Often, the team works on four models at a time, moulding and taking images to digitise the final shape. It helps Tata Motors design better cars and also helps answer a larger question: whether the big acquisition of Jaguar Land Rover ( JLR) is rubbing off on the Indian carmaker.

Before answering the question, Pratap Bose, clay modeller-in chief and head of design at Tata Motors, brings out a disclaimer. JLR may be incorporated as one entity, but Jaguar and Land Rover are separate operations, each fiercely shielding its engineering, design and branding from the other.

Tata Motors may be the parent company, but it can only hope to learn from their processes and not borrow the technologies. After taking over as design head two years back, Bose introduced two new steps in Tata Motors’ design. Clay modelling is one.

The other is handcrafting a full-size car out of metal and plastic. That’s not futuristic technology at work; rather it is going back to the basics of car designing, something Tata Motors took almost two decades to learn.

The handcrafted model is great for getting feedback before machining facilities are finalised. Then there are the finer details that Bose points out — colours must match across material, metals and plastic, and they should look similar from different angles.

The company also learnt that women drivers are impressed by such attention to detail. They also like utilities inside the car. Mayank Pareek, president of Tata Motors for passenger vehicles, says: “We have done the hard work in reinvigorating and recasting Tata Motors’ products with an eye on customer preferences.

Women are important influencers when it comes to the purchase of a car. They are also 17 per cent of our customer base.”

The result is Tata’s new car Tiago, a hatchback priced at Rs 3.20 lakh which, in its third month, outsells every other model from the Tata stable. Launched in April 2016, 4,205 Tiagos were sold in June, 22 per cent more than the previous month’s sales.

With pending bookings exceeding 23,000, the Tiago can easily notch up higher numbers in the coming months. With great looks, interiors and great audio to wow the customer, Tiago hopes to remake Tata Motors’ passenger cars division and take the company back to among the top three in Indian passenger cars market, as India MD Guenter Butschek, said in his message to shareholders in the company’s annual report.

As of June, Tata Motors is ranked No. 5 in market share.Uphill climbTiago may be outperforming other Tata models, but across industry it is perched at No. 17 in the monthly car sales.

Two other recent hatchback launches, Renault’s Kwid and Datsun’s Redi-GO, have scorched a pace. Kwid, launched in September 2015, sold almost 10,000 units in June, with bookings exceeding 1.5 lakh. Redi-GO, launched after Tiago, has notched up 10,000 bookings already.

Tata Motors is hopeful that the features packed and aggressively priced Tiago — it is priced between Kwid and Maruti’s Alto K10 — will shake up the hatchback segment, which accounts for 50 per cent of all car sales. Tiago is critical to Tata Motors’ relevance in the car business.

After all, among the half-dozen reports by equity analysts on the company in June and July, little or nothing is said about the Indian passenger cars business. JLR dominates discussions.

There’s reason for that: in 2015-16, the passenger vehicles sales of Tata Motors had fallen by 7 per cent. While the consolidated Tata Motors operation (with JLR) had reported a profit in excess of Rs 11,000 crore for 2015-16, the Indian operation — including passenger and commercial vehicles — contributed only Rs 234.23 crore, or a little over 2 per cent.

The underperformance is a reflection of little working for Tata Motors on the new products front. Zest, a compact sedan, and Bolt, a premium hatchback, the first two Tata cars that were built with the philosophy of targeting individual buyers rather than fleet owners, have not seen the kind of success anticipated, although Pareek insists they have recorded steady sales.

Bolt sold 698 units in June 2016 and 596 units in May. Zest did better with 1,554 units in May and 2,138 in June. Nano GenX, the revamped Nano, showed some initial promise but has since faltered with sales of 856 units in May and 481 units in June. Similarly, Safari Storme SUV, launched in November 2015, sold only 482 units in June and 333 in May.

Pareek points out that the passenger vehicles segment recorded a 37 per cent growth in sales in June over May. However, apart from the Tiago, growth has come from the old workhorses, the Indica and the Indigo.

These are the fleet cars, and precisely the image that the company is trying to erase. The Indica sold 2,223 units in June after a lacklustre 904 in May and the Indigo sold 1,960 units in June, a 232 per cent growth over its May sales.Part of the solutionWhile June delivered good numbers for Tata Motors, there was bad news elsewhere. Lionel Messi, the company’s brand ambassador, almost ran aground his endorsement value.

Mayank Pareek points out that PV segment recorded 37% growth in sales in June over May. However, apart from the Tiago, growth has come from the old workhorses, the Indica and the Indigo.

Messi, after a sterling run to the final in Copa America, missed his shot in the penalty shootout as Argentina lost to Chile. He promptly announced his retirement from international football.

Then the star and his father were convicted of tax fraud in Spain with prospects of a suspended jail term — leading to speculation that Messi may leave his Spanish club Barcelona.

That’s not something Tata Motors would have bargained for when Messi was signed up for a two-year deal. Messi was supposed to be part of the solution for Tata Motors: to get its Indian passenger vehicles business to pull up its socks.

A global brand ambassador was meant to match the work done on improving the consumer experience. This involved moving on to two new platforms for carmaking with new powertrains and a whole new philosophy.

One man who has seen through the transition is Girish Wagh, the head of project planning and programme implementation at Tata Motors. Wagh had shot to fame when he headed the first Nano project back in 2007-08.

Wagh told ET Magazine: “Tiago is on a completely new platform. We were focused on three things: great design, driving pleasure and great connectivity.” While Bose and his team, in London, Turin and Pune, have worked on the design, making it contemporary and ergonomic, Wagh has been focused on finding an optimum balance between ride and handling. “Ride is about city driving and on crowded highways; handling is about control at high speeds,” he says.

The cars also have two modes that a driver can choose from, a city mode and an ecomode or a fuel-saving mode, offered first on the Zest. There was also a determined effort to reduce BSR — buzz, squeak, rattle — and provide a good torque curve, something that helps make the car “sprightly” during city driving. With the Tiago, the company also moved to the new-generation Revotron engines.

Decision Time The trajectory that Tiago sales has taken is encouraging. However, the key to turning around operations is creating a family of cars around it. Wagh accepts that while globally car companies are working on bringing down the number of platforms, Tata Motors has five.

The two older platforms for its cars and SUVs coexist with the two newer ones, and then there is Nano. There are three new launches lined up, which were all exhibited at the Auto Expo 2016 in Delhi. The Tiago twin, code-named Kite 5 ,will be a compact sedan.

The Tatas already have Zest, a compact sedan and it will be interesting to see how the Tiago twin will be positioned. Then there will be Hexa, the SUV, which Wagh describes as a “true-blue full-blooded body over frame construction on a completely new platform”; and there is the exciting space of a compact utility vehicle in which the company wants to launch the Nexon.

Says Pareek: “We still have a limited portfolio and we expect our volumes to climb gradually with the consistent introduction of new models over the coming years.” Meanwhile, the company is trying to ramp up production to cater to demand for the Tiago. Pareek adds.

“Having launched in April, a month or two is too short a time to analyse Tiago’s success. The Tiago is a game-changing effort towards a robust passenger vehicle business. We have many first-time buyers visiting our showrooms and we have also enhanced our after-sales experience” Much of these first-timers have been pulled in by Messi, whose image dominates showrooms.

The Tiago almost saw a fiasco at birth, when it was named Zica. A virus named Zika took the world by storm and a new name had to be found. An open contest for a new name in February led to Tiago. It was a happy coincidence that the star brand ambassador Messi’s son is named Thiago.

It won’t be easy for Messi and Tata Motors to part ways — that’s just another decision that the top management at Tata Motors will have to make as they look to come back into the game.